A mortgage is an interest in a property that is used to secure a debt. It's closely associated to the loan that's typically given in exchange for this interest in the property. The term "mortgage" itself is frequently used to refer to the loan rather than the security for the loan.
Mortgagor
The borrower of a home mortgage may also be called the mortgagor. This is most often a home buyer, but it can also be a landlord or some other business owner. The terms of the mortgage specify the conditions under which the security for the loan will be returned to the mortgagor. This generally occurs when the mortgagor repays the loan.
Mortgagee
The lender of the loan is also known as the mortgagee and is usually a financial institution. The mortgagee generally has the right to possess and even sell the property in the event the mortgagor defaults on the loan.
Procedure
The mortgagee provides a loan to the mortgagor. In exchange, the mortgagee receives an interest in the property equal to the value of the loan. This property is typically a house, although it can be other forms of real property in many jurisdictions. The mortgagor then uses a loan to buy the property from the owner and repays the mortgagee by making installment payments at regular intervals.
Ownership
Most mortgages in the United States are a mortgage by legal charge. The mortgagee doesn't actually become the owner of the mortgaged property in this type of mortgage but does gain specific legal rights over the property. These rights are intended to ensure that the mortgagee is able to enforce the security of the loan. This generally means that the mortgagee can sell the property.
Recovery
The mortgagee is generally entitled to recover the debt by selling the house if the mortgagor defaults on the loan. The mortgagee may also be entitled to sue the mortgagor if the proceeds from the sale of the house are less than the outstanding debt. However, the mortgagee's rights of recovery are dependent on the specific jurisdiction.
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